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Following is the full text of the speech (English only) by the Chief Secretary for Administration, Mrs Anson Chan, at a Trade Development Council luncheon in Berlin, Germany on June 16 (Berlin time):
State Secretary Grossman, Senator Branoner, Dr Fuchs, distinguished guests, ladies and gentlemen,
Firstly, I would like to thank Dr Fuchs for his kind introduction. Secondly, on behalf of my colleagues who have travelled with me to Berlin, I would like to extend a warm welcome to the people of this great city who have made us feel so welcome. Thirdly, I'd like to make a confession : this is my first visit to Berlin - a serious oversight which I have attempted to rectify by bringing to you a taste - an enticing taste, I hope - of my own city, Hong Kong.
Over three days, we are presenting to Berliners a snapshot of Hong Kong : through the gala dinner we hosted last night in the Berliner Rathus; the architectural exhibition I opened just now; this morning's business conference and lunch; the Hong Kong-Berlin Cultural Exchange which comes to life immediately after lunch; and a food festival we launch later this evening in the Atrium of the Deutsche Bank. That is a nice Hong Kong touch, enjoying a Chinese banquet surrounded by all that money.
The purpose of it all is quite simple : we want to know you better; we want you to know us better. We are both important cities in our own geographical regions and timezones who have much to offer each other and, increasingly in this age of globalization, the rest of the world.
We already have an important economic partnership which manifests itself in trade and investment and, as you heard this morning, an abundance of opportunities for this partnership to grow to the benefit of us both. But there is a good deal more to the relationship than dollars and deutchmarks.
There are strong bonds of friendship between your city and mine in the shape of a large German diplomatic and expatriate presence which involves itself in the wider community of Hong Kong; a fine international school in Hong Kong that teaches local and expatriate children in both German and English languages; and is sufficiently immersed in our culture to mount the Festival of Vision - Berlin/Hong Kong from the end of July through to early September in Berlin and from the beginning of November to early December in Hong Kong. Our Government is very proud to support this imaginative venture.
There is a natural synergy between the people of Berlin and Hong Kong. We have a similar historical background, having been separated from our respective countries and, quite recently, being once again united. It is tempting, based on such a shared experience to draw parallels between our two cities. Tempting, but potentially misleading. Let me explain why.
The constitutional arithmetic is fairly straightforward. During the decades when the people of Germany were divided, you had two countries with two distinct systems. Since reunification, you are one country, one system.
The Hong Kong situation is somewhat more complicated. For a start, in Hong Kong, apart from a brief period during the Cultural Revolution, there was not the same hostility and tension between China and Hong Kong that existed between East and West Germany. Hong Kong was never a Cold War issue, much less a flashpoint.
Indeed, particularly in the post-war years, there was a remarkable degree of pragmatic tolerance in Beijing of the colonial situation in Hong Kong. There was no attempt to kill the Golden Goose. And the transition was put in place over a dozen years based on a detailed agreement signed in 1984 between China and Britain which was lodged with the United Nations.
And so, on 1 July 1997, at a ceremony that attracted almost as much television coverage as the fall of The Berlin Wall, Hong Kong ceased to be a British colony and became once again part of China, enjoying a unique status as a Special Administrative Region under an unprecedented concept devised by Deng Xiaoping known as One Country, Two Systems. It was, by general consent, a seamless transition.
What does all this mean? Stripped of its diplomatic protocol and political polemics, it means, in effect, that Hong Kong remains exactly as it has always been : a working role model of Milton Friedman's free-market capitalism, protected by the rule of law and underpinned by the personal freedoms and civil liberties and the institutions of civil society - that is churches, trade unions, charities, non-government organisations, professional associations and friendship societies - with an executive-led government accountable to an elected legislature.
There is much in practical terms, too, that underline our unique status in the Mainland. Hong Kong has its own currency, the Hong Kong dollar, linked to the US dollar since 1983. A physical land and seaboundary separates us from the Mainland. It is manned on our side by our own police, immigration and customs officials and on the other side by the PRC authorities. Chinese officials and citizens need proper documentation to enter Hong Kong. We have our own passport, available only to citizens of the SAR. We are a separate customs territory and separate signatory to the WTO. We enjoy membership of a host of international organisations, such as APEC, in our own right. We send our own competitors to the Olympics and Asian Games, not as part of the Mainland team.
Let me give you two vivid examples of how One Country, Two Systems works in practice. Less than two weeks ago, thousands of Hong Kong people gathered at a vigil for the annual commemoration of the June 4 Tiannamen incident. Members of the Falun Gong, the movement which is banned in China, continue to practise freely in Hong Kong. And so, One Country, Two Systems is a brilliant concept whose time has come in Hong Kong.
I have just sketched the outline of a free, liberal, open, plural society - for that is what Hong Kong is, and shall remain. This is guaranteed in our constitutional document, the Basic Law, which has been promulgated by the National People's Congress of the People's Republic of China. The Basic Law enshrines the free market economic structure, the rule of law and the human rights and freedoms which have been the cornerstone of Hong Kong's remarkable success.
I readily accept that some people will find all this difficult to swallow. After all, the idea of the world's most free-wheeling capitalist society being absorbed by the last remaining Communist giant would seem an unlikely prospect, and many critics felt that the experiment was doomed to failure, that Hong Kong would have no future once it became absorbed and answerable to Beijing rather than London.
Well, two weeks short of three years on, I can safely say that Hong Kong has seen the future, and it works. One Country, Two Systems has been transformed from a political concept into a practical reality. Since 1 July 1997, Hong Kong people have been left to their own devices to run their own affairs in every respect other than defence and foreign affairs, just as Beijing promised they would be. Hong Kong remains as free today as it has ever been, a cosmopolitan city where East blends smoothly with West, where many of the long-term German residents I know would be happy to declare "Ich bin ein HongKonger".
I don't necessarily expect you to take my word for that. But there are many watchdogs in the international community keeping an eye on Hong Kong, including the United Kingdom and the United States Governments and the Eurpean Union, which publish annual reports on Hong Kong's progress since the transition. All three, by and large, have given us a clean bill of health.
Let me just quote from the Second Annual Report by the European Commission published last month :
"Hong Kong remains one of the freest societies in Asia. Hong Kong people are running Hong Kong and doing so effectively. The European Commission notes the provisions in the Basic Law regarding the pace of democratisation and welcomes open and public debate in Hong Kong. The economy is gradually recovering from the Asian financial crisis and EU companies continue to invest heavily in Hong Kong. This demonstrates confidence in Hong Kong's future."
The fact is that the Beijing leadership's "hands-off" policy on Hong Kong is a happy arrangement that suits all parties. It suits the people of Hong Kong because our constitution codifies our freedoms and preserves the dynamic and entrepreneurial lifestyle that has made Hong Kong the world's tenth largest trading economy, the sixth if you are to take the EU as a whole. Tiny Hong Kong, with a population of just under 7 million people, generates an annual GDP the equivalent of nearly one-fifth of China's, with its vast population of 1.2 billion people.
It suits China because it brings about peaceful reunification in a pragmatic way which earns the Beijing leadership recognition for its statesmanship; and it enables Hong Kong to continue to build on its contribution to the Mainland economy as an open international city and a window on the world.
You undoubtedly heard this morning, but it's worth repeating that Hong Kong is the largest source of foreign direct investment in China. The Mainland is the second largest source of investment in Hong Kong. Hong Kong companies employ some 5 million people in wholly or partly owned ventures in neighbouring Guangdong Province. There are more than 1,800 Mainland companies operating in Hong Kong.
Finally, the arrangements suit the international business community which uses Hong Kong as its gateway to China and the whole of the Asian region. Our international investors made up their minds to stay in Hong Kong long before the change of sovereignty. Indeed, the foreign community in Hong Kong today is larger than it was before the Handover, which is a sure sign that even in times of recession, long-term prospects override short-term setbacks.
We operate an open door policy towards foreign investors and run a liberal immigration regime for foreign residents. We also have a special scheme to tap particular skills from the Mainland. As a small economy dependent on international trade and commerce, we have long accepted that we need imported brainpower, expertise and innovation and technology to enrich our homegrown talent and energy.
There has been no change to that policy. Nor should there be, as we have set our sights firmly on becoming Asia's World City, just as New York is to the Americas or Berlin is in your own sphere of influence.
And what do I mean by a World City? I mean a city with a vibrant economy in its own right. A depth of talent in every field of endeavour from the arts, culture and education to business and banking, technology and information and the media. A location of choice for the principal offices of major corporations. The service hub for a large hinterland. A bright and diverse population.
We are already Asia's most international city with most of the characteristics I have just mentioned. There is much in Hong Kong that would be familiar to anyone from New York or London or Berlin or Paris, or for that matter any of the great cities of Europe. Hong Kong is, as I have said, a free society based on the rule of law. It is an international centre of finance and trade; services such as communications and transport; regional and international media; and home to numerous multi-national corporations and a large international community. We have a hinterland of vast potential.
We have to do more to consolidate and enhance our position, and we are doing just that. I believe that our speakers this morning have addressed many areas of reform and repositioning that have been taking place in Hong Kong these last two years, in particular in e-commerce, financial services, transport and distribution and our role as Asia's business integrator.
All of this is timely given what has happened in our region over the last three years. I suspect the causes of the crisis that engulfed the major Asian economies in 1997 have been taken by some in other parts of the world as a sign that the Asian region will be less important than people once thought it would be. There certainly hasn't been too much talk in recent times about the Pacific Century.
To my mind, that silence may be more premature than prophetic. While the regional rebound is still in its early days, forecasts indicate that this year the nine economies of East Asia, excluding Japan, will grow by an average of 6.3 per cent; and there are predictions of a 6 per cent growth in 2001. In Hong Kong, we are forecasting growth of 6 per cent this year which we are reasonably confident of achieving given that our economy grew by a remarkable 14.3 per cent in the first quarter of this year. This compares with the average projected growth for the G-7 countries, which include Japan, of 3.3 per cent; and 2.7 per cent next year.
These are encouraging signs. But there is no doubt that what happened between 1997 and the end of last year exposed some fundamental weaknesses and frailties in the economic make-up of the region.
It was, in an historical context, a watershed. And what has happened in many ways serves as a wake up call. It has resulted not only in economic restructuring, but more than a little bit of soul searching and character re-building. Personally, I am confident about the future of Asia. I believe the recovery we have witnessed in recent times is sustainable.
But there are caveats :
* Asian countries must continue to push ahead with the reforms set in train during the Asian financial crisis;
* Secondly, we need a continued and strong commitment to free, open trade and further liberalisation in trade and services;
* Thirdly, we need political stability in the region, and importantly for Hong Kong, a positive Sino-US relationship and a reduction in tension across the Taiwan Strait;
* and, finally we must keep a watchful eye on the US and Japanese economies, the performances of which will impact on the sustainability of the recovery now taking place.
For our part, Hong Kong has a very clear vision of what it must do to stay ahead of the e-wave and ensure that our economy is properly geared to meet the challenges of the new century. There must be a more important role in the economy for innovation and technology. A multi-faceted Cyberport which has already attracted some of the world's most important hi-tech players as anchor tenants is taking shape. We must also upgrade our human capital to meet the challenges of the New Economy. We are in the midst of a major restructuring of our education system. We have an extensive retraining programme. We are putting significant resources into language training to ensure that we keep up our standard of English and improve our facility in Putonghua. To maintain our competitiveness as a financial services centre, we have completed major reforms in our banking and financial services sectors.
But above all, as a community, we are determined to maintain the high degree of autonomy mandated to us by Beijing that protects our freedoms and our way of life. I don't have to tell an audience of Berliners how vital that is. I can assure you that Hong Kong people are vigilant about protecting its rights and freedoms. That is how it should be, for we all know that freedom is hard won, but easily whittled away.
Our systems are vastly different from those in the Mainland, and this is essential to our continued stability, prosperity and economic development. We are proud to be reunited with China, but we jealously guard the high degree of autonomy provided by the Basic Law. It sends an important message to the international community that their investments, their business dealings, their commercial contracts and their human rights and freedoms are protected by a trusted legal system and an independent judiciary based on English common law.
Ladies and Gentlemen, I hope that through our efforts today, at this morning's seminar, and over the last 20 minutes or so at this most enjoyable lunch, we have been able to present you with a clear and honest picture of Hong Kong.
We have come through the transition more successfully than many people thought possible. We have tackled the challenges thrown up by the Asian financial crisis to effect reforms, sharpen our strategic thinking and put in train the building blocks that we need to achieve our goal of becoming Asia's world city.
We consider it of the highest importance to forge even closer ties with our friends and partners in Europe, particularly in Germany, our largest trading partner in continental Europe. And I certainly hope this is not my last visit to Berlin.
I hope, too, that I have been able to convey to you the self-confidence of our community and its regard for the values that have enabled us to get to where we are today. I am sure we can rely on your encouragement and support to build on the promising start we have made in making a success of One Country, Two Systems. For I am convinced that the brightest future will belong to those communities which dedicate themselves to the rule of law; to free trade; an open market in goods and services and ideas; clean, transparent and accountable government; respect for decent human values; tolerance of diversity; and intolerance of corruption and cronyism.
These are the benchmarks we have set for ourselves in Hong Kong.
Thank you very much.
End/Saturday, June 17, 2000
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